Intel Report: Mobility News

BY AUTOMOTIVE VENTURES | NOV 13 2023 | VIEW ONLINE ➡️

Great video recap of this year's NAVIcon conference. Thank you Paul and Kyle from ASOTU for the coverage!

What We're Reading:

John McElroy was eerily prescient back in 2018 with his predictions about how the EV market would play out. (Link)

There is little evidence that the climate law has supercharged consumer demand for electric vehicles. The pace of EV sales growth is slowing. The climate law “certainly helped” with electric vehicle sales, said Mike Stanton, the president of the National Automobile Dealers Association (NADA). But, he said, “we were hoping for more.” (💲Link)Despite battery-electric vehicles’ growing popularity, 85% of their buyers also have at least one gasoline-fueled vehicle. Just 4% own only an EV. (Link)Partisan politics appear to be shaping consumers’ adoption of electric vehicles, as sales lag in Republican strongholds where gas prices are cheaper. This resistance presents a challenge for the auto industry and President Joe Biden as they work toward a shared goal of converting U.S. consumers to cleaner cars. (💲Link)Buyers looking to get a bargain on a new car might want to consider an electric vehicle. As sales growth has slowed for battery-powered models, automakers and dealers are slashing prices and piling on discounts to clear out unsold inventory. (💲Link)Carmakers in leading western markets have significantly increased the range and scale of discounts they offer on electric vehicles in a bid to counter weaker-than-expected appetite for battery models among mainstream buyers. Sales and financial data compiled by HSBC shows carmakers are, for the first time, having to offer deals on battery models to move vehicles that previously had months-long waiting lists. (💲Link)Under increasing pressure from new competition, Tesla spent the past year slashing the average price of its models by roughly 25%. Tesla is hoping that lower prices will drive up sales and slow the advance of the company's rivals — maybe even scare some of them out of the market altogether. But that's not what's happening. Lower prices are not translating into higher sales. The number of cars Tesla delivered to customers in the third quarter actually declined. Revenue is dropping, and the company's once fat profit margins are getting squeezed — down to 17.9% in the third quarter, compared with 25.1% a year ago. Competitors aren't being driven out of business, either. Once totally dominant in the EV space, Tesla's share of the US market has fallen from 62% at the beginning of the year to only 50% today. To make matters worse, the public's appetite for EVs isn't growing as fast as automakers expected. That means Tesla has set off a protracted battle for a piece of a pie that's growing crumb by crumb. (Link)Detroit’s recent standoff with the UAW will add costs to manufacturing EVs. After coordinated strikes lasting six weeks, the UAW reached agreements with Ford, Stellantis, and GM that would bring pay up by as much as 33% over the life of the contracts. The deals are already elevating wages outside the union tent — Toyota immediately raised hourly rates for its US assembly workers — and the UAW is now planning an aggressive push to unionize factories run by Volkswagen, Hyundai, and Tesla. (💲Link)Joe Biden threw his support behind the UAW’s efforts to unionize employees at Tesla and Toyota in the wake of the labor group’s historic contract with Detroit’s Big Three automakers. (💲Link)UAW President Shawn Fain’s brazen, theatrical and digitally savvy strike against Detroit’s Big Three automakers yielded one of the most worker-friendly contracts any union has negotiated in decades, with compensation gains that are already forcing other parts of the auto industry to raise wages. Fain combined potent symbolism — tossing auto offers in the trash and wearing an Eat the Rich T-shirt — with an unwavering call for workers to stand up and fight the “corporate greed” and “billionaire class” that he said was leaving them behind. The tough-minded approach has earned Fain celebrity status in left-wing circles looking to energize the labor movement — even as it introduces an icy new era of relations with Detroit’s biggest automakers, which argue that Fain has unnecessarily cast them as the enemy. (💲Link)Electric vehicle (EV) collision repair costs continue to outpace expenditures to repair vehicles with internal combustion engines (ICE), according to Mitchell, which reported the cost difference is $950 in the U.S. and $1,301 in Canada. (Link)While car insurance rates are rising faster than inflation nationally, Florida’s increases have been the most drastic — the average premium today is 88% more expensive than a decade ago. Insurers have blamed the costly premiums on hurricanes and a high percentage of uninsured drivers, but the companies seldom mention that they also are passing on the cost of auto glass litigation. (💲Link)Tesla plans to build a 25,000-euro ($26,837.50) car at its factory near Berlin. (💲Link)Tesla has been using gigacasting as a manufacturing method for its Model Y sport utility vehicle since 2020. Musk has said he first had the idea after looking at his child’s die-cast toy cars — and wondering why that could not be replicated for the real thing. (💲Link)

Idra Group, an Italian-based aluminum casting machine maker, has won a contract with Volvo Cars to install two 9,000-ton Giga Press machines at the automaker's new EV plant in eastern Europe. The machines are the size of a small house or a tennis court. Idra is a Tesla supplier and has recently added Ford and Hyundai to its customer base as more automakers explore this manufacturing technique. (💲Link)

Rivian lost $30,648 for every vehicle it delivered in the third quarter—only 6% better than in the second quarter. The company expects to break even at the gross level, which excludes company overheads, by the end of next year. (💲Link)Rivian CEO RJ Scaringe argues that the industry overestimates how much automakers can charge for each software upgrade. “The idea of charging for heated seats or charging for sort of a binary one or zero — like turning a feature on and off, we don’t think that that’s going to land well with consumers,” said Scaringe. (Link)This month marked the first SEMA show since the death of Ken Block in January. Hoonigan hosted a spectacular 30-car burnout salute to its late founder. (Link)The right-to-repair movement gained a significant victory as a Maine law won over 84% public support. The measure asked if voters want auto manufacturers to enable owners and their preferred mechanics to access their car’s diagnostics systems. Voters said yes. Maine follows four states that enacted new right-to-repair laws this year. (Link)Ford came in dead last in a recent survey on dealers' level of trust in their franchises, with 46% of Ford dealers surveyed by Kerrigan Advisors saying they had "no trust" in their franchise. (💲Link)

With over 100 car brands, many unprofitable, and slowing sales growth at home, China’s auto industry has a powerful incentive to look for more lucrative markets overseas. China’s share of global EV exports grew from 4% in 2020 to 21% in 2022. (💲Link)Having charged up in their massive home market, Chinese electric-vehicle-battery firms are becoming major export players, too. The West’s efforts to protect its own markets might prove too little, too late. (💲Link)

Chinese automaker NIO is debating a 2025 entry in North America. (💲Link)China has secured a significant stake in a network of global ports that are central to world trade and freedom of navigation. Although the stated goal of the investments was commercial, the United States and its allies have grown increasingly concerned about the potential military implications. Chinese President Xi Jinping has frequently talked of his ambition to turn China into a “maritime superpower.” The port network offers a glimpse into the reach of those ambitions. (💲Link)Lithium prices have tumbled almost 70% so far this year, while nickel has plummeted around 40%. Cobalt too has dropped. This trio of electric vehicle battery ingredients is now among the worst-performing in the commodity universe. (💲Link)The energy transition is getting a dose of reality. Offshore wind projects are being scrapped, and renewable-energy companies’ share prices are tanking. In the U.S., automakers are reining in electric-vehicle plans as demand falters. Meanwhile, the oil and gas industry is embarking on a round of megadeals enabled by soaring profits and is pushing more forcefully the idea that fossil fuels will be around for a long time yet. (💲Link)Technology start-ups are racing to make recycling electric vehicle (EV) batteries cleaner and more economical, with investors pouring billions of dollars into recycling facilities globally to prepare for a surge in disposed packs and for regulations mandating minimum recycled content in new EV batteries. With the first batch of electric cars nearing the end of their roughly 10-year lifespan, traditional recycling methods for lithium-ion batteries that power EVs are highly energy-intensive and involve burning used batteries at more than 1,400C. (💲Link)Polestar will pilot and demonstrate a super high-speed battery charging technology — capable of adding 100 miles of range in just five minutes — in a prototype Polestar 5 performance sedan next year. Israeli startup StoreDot is developing what it calls "extreme fast charging" technology. StoreDot seeks to mass-produce batteries that can achieve that range with five minutes of charging by 2024, followed by technology that can hit that figure in three minutes by 2028 and just two minutes by 2032. (💲Link)Elon Musk's company Neuralink is seeking a volunteer for its first clinical trial, meaning it’s looking for someone willing to have a chunk of their skull removed by a surgeon so a large robot can insert a series of electrodes and super thin wires into their brain. (💲Link)SpaceX is on track to book revenues of about $9 billion this year across its rocket launch and Starlink businesses, with sales projected to rise to around $15 billion in 2024. (💲Link)When it comes to the future, Elon Musk’s best-case scenario for humanity sounds a lot like Sci-Fi Socialism. The world’s richest man, who for years has warned about the dangers of artificial intelligence, lately has been painting a more utopian vision for what could occur when supersmart robots are able to replace everyday workers. “We will be in an age of abundance,” Musk said this month. (💲Link)The U.S. Department of Transportation predicts that 12% of potential vehicle crash scenarios could be avoided using communication between infrastructure and vehicles. Widespread V2X deployment has been technically feasible for some time. Yet decades of stalemate caused by a lack of clarity around the type of wireless transmission powering V2X has held up widespread deployment. (💲Link)Britain will make the makers rather than the owners of self-driving cars legally liable for any crashes under a framework for developing autonomous vehicles (AV), in a move welcomed by insurers and AV startups. (💲Link)

Pathfinder 1 is a prototype electric airship longer than three Boeing 737s, that its maker LTA Research hopes will kickstart a new era in climate-friendly air travel, and accelerate the humanitarian work of its funder, Google co-founder Sergey Brin. (Link)

Have a great week,Steve Greenfield

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Notable & New

It was a pleasure catching up with Paul and Kyle from ASOTU on the NAVIcon stage, and our NAVIcon Cup winner: Jimmy Douglas from Plug. (Link)

📢 Jim Roche from Automotive Ventures portfolio company WarrCloud catches up with Dan Shine from Automotive News. (Link)📢 Baloise discusses the benefits of Automotive Ventures' portfolio company Go Eve. (Link)

📢 Chase Fraser from FM Capital moderated the entrepreneur panel at NAVIcon.

Thanks to Jason Trevisan from CarGurus for our fireside chat at NAVIcon.📢 Automotive Ventures portfolio company BusRight is hiring. (Link)

📢 Join me on this panel discussion with Andrew Chow and Matt Stanley from FICO on December 7th on the “Future of Automotive Finance”. (Link)

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Companies to Watch

🌟 Plug, this year's NAVIcon Cup winner, is an online marketplace that facilitates wholesale buying and selling of used EVs among a network of dealers and fleet operators. Plug addresses the need for EV-specific information that is not consistently available in traditional systems, including high-voltage battery pack health, software-enabled features, and accurate build data, which are crucial for understanding an EV's value and longevity

. (Link)

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